​Germany believes eurozone can survive Greece exit – report

Germany believes the eurozone is now stable enough and has sufficient rescue mechanisms to survive the potential ramifications of Greece leaving the single currency union, Der Spiegel reports citing sources in the German government.

With just three weeks
before Greeks go to the snap polls on January 25, the German
leadership apparently takes yet another opportunity to remind
their Mediterranean partners the eurozone can survive without
them.

Calling a potential Greek exit “manageable”, both
Chancellor Angela Merkel and Finance Minister Wolfgang Schäuble
are adamant that the EU has implemented all necessary reforms
since the crisis in Greece first erupted, in order to handle
Greece exit from the single currency, Der Spiegel reported citing sources in the German
government.

"The danger of contagion is limited because Portugal and
Ireland are considered rehabilitated," the weekly quoted one
government source saying.

Another source said that the European Stability Mechanism (ESM),
which offers states up to 500 billion euros emergency bailout, is
an "effective" rescue tool while the major banks are
expected to be protected by the banking union.

According to Der Spiegel report, the German government considers
Greek exit from the eurozone a practical possibility if the
leftwing opposition, headed by Alexis Tsipras' Syriza party, wins
on January 25.

Syriza is leading the race, according to a number of pre-election
polls in the country. The euro-skeptic party is capitalizing on a
wave of public discontent with harsh austerity measures that
Athens was forced to accept in return for a 240 billion euro
bailout.

As to the legality of an EU member state leaving the single
currency market, Der Spiegel quoted a "high-ranking currency
expert" as saying the issue could be clarified with the help
of "resourceful lawyers."

While the German government could not be reached for comment to
confirm Der Spiegel’s report, the Finance Minister Wolfgang
Schäuble earlier warned Athens against dropping the austerity
program, saying any new government would need to honor the
current Antonis Samaras government’s pledges.

"New elections will not change the agreements we have struck
with the Greek government. Any new government will have to stick
to the agreements made by its predecessor,” Schäuble said
Monday.

Meanwhile, Merkel’s chief adviser, Michael Fuchs, warned this
week that Germany will not be blackmailed into rescuing Greece
anymore. "If Alexis Tsipras of the Greek left party Syriza
thinks he can cut back the reform efforts and austerity measures,
then the troika will have to cut back the credits for
Greece," he said.

"The times where we had to rescue Greece are over. There is
no potential for political blackmail anymore. Greece is no longer
of systemic importance for the euro,” Fuchs said in an
interview with Rheinische Post newspaper.

In the meantime, speaking at a party congress on Saturday,
Tsipras said the European Central Bank (ECB) could not exclude
Greece if it embarks on a "quantitative easing" program to
stimulate the European economy.

"Quantitative easing by the ECB with direct purchases of
government bonds must include Greece," Tsipras said, as he
promised to roll back many of the austerity policies imposed by
the bailout.

He also promised to ensure that much of Greece's debt is written
off as part of a renegotiation of its international bailout deal.

"Austerity is both irrational and destructive," he said
as Greece's debt equates to more than 175 percent of gross
domestic product. “To pay back debt, a bold restructuring is
needed.”